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nderstanding the environment within which the business has to operate is very important for running a business unit successfully at any place. Because, the environmental factors influence almost every aspect of business, be it its nature, its location, the prices of products, the distribution system, or the personnel policies. Hence it is important to learn about the various components of the business environment, which consists of the economic aspect, the socio-cultural aspects, the political framework, the legal aspects and the technological aspects etc. In this chapter, we shall learn about the concept of business environment, its nature and significance and the various components of the environment. In addition, we shall also acquaint ourselves with the concept of social responsibility of business and business ethics.
After studying this lesson, you will be able to: • • • • • • • explain the meaning of business environment; identify the features of business environment; describe the importance and types of business environment; describe the recent developments in Indian Economy that have greatly influenced the working of business units in India; explain the concept of social responsibility of business; state the social responsibility of business towards different interest groups; and explain the concept of business ethics.
3.1 MEANING OF BUSINESS ENVIRONMENT
As stated earlier, the success of every business depends on adapting itself to the environment within which it functions. For example, when there is a change in the government polices,
1 FEATURES OF BUSINESS ENVIRONMENT On the basis of the above discussion the features of business environment can be summarised as follows. business environment may be defined as the total surroundings.g. the colour television has made the black and white television out of fashion. e. which have a direct or indirect bearing on the functioning of business. social factors. technological and legal conditions. Similarly. others may operate indirectly. (b) It covers factors and forces like customers. cultural. Hence. These include customers. 54 Senior Secondary . While some of these factors or forces may have direct influence over the business firm. a change in the technology may render the existing products obsolete. Thus.. suppliers. suppliers.1. government. such as economic factors. political and legal factors. political. Social factors Economic Factors Political Factors Business Decisions Legal Factors Technological Factors Demographic Factors 3. factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise. technical factors etc. political. competitors. demographic factors. the demand for jeans reduced the sale of other traditional wear. (a) Business environment is the sum total of all factors external to the business firm and that greatly influence their functioning. and the social. All these aspects are external factors that are beyond the control of the business. competitors. government. It may also be defined as the set of external factors.MODULE -3 Business Around Us Notes the business has to make the necessary changes to adapt itself to the new policies. The term ‘business environment’ connotes external forces. So the business units must have to adapt themselves to these changes in order to survive and succeed in business. legal and technological factors etc. as we have seen that the introduction of computer has replaced the typewriters.. Again a change in the fashion or customers’ taste may shift the demand in the market for a particular product. and the social. it is very necessary to have a clear understanding of the concept of business environment and the nature of its various components. which are uncontrollable in nature and affects the business decisions of a firm.
Political conditions in India differ from those in Pakistan. Taste and values cherished by people in India and China vary considerably. and dynamic in nature and has a far-reaching impact on the survival and growth of the business. (d) Image Building: Environmental understanding helps the business organisations in improving their image by showing their sensitivity to the environment within which they are working. For example.2 IMPORTANCE OF BUSINESS ENVIRONMENT There is a close and continuous interaction between the business and its environment. many companies have set up Captive Power Plants (CPP) in their factories to meet their own requirement of power. To be more specific. The managers are motivated to continuously update their knowledge. (f) Identifying Firm’s Strength and Weakness: Business environment helps to identify the individual strengths and weaknesses in view of the technological and global developments. it keeps on changing. It enables the business to identify the areas for growth and expansion of their activities. (e) Business Environment differs from place to place. (c) Continuous Learning: Environmental analysis makes the task of managers easier in dealing with business challenges. INTEXT QUESTIONS 3A 1. (e) Meeting Competition: It helps the firms to analyse the competitors’ strategies and formulate their own strategies accordingly. the business environment is multifaceted. Define the term Business Environment in your own words. political. Notes 3. As stated above. It helps the business enterprises for meeting the challenges successfully. It is very difficult to predict the exact nature of future happenings and the changes in economic and social environment. understanding and skills to meet the predicted changes in realm of business. region to region and country to country. that means. (d) The changes in business environment are unpredictable. in view of the shortage of power.MODULE -3 Business Around Us (c) The business environment is dynamic in nature. legal and economic environment helps the business in the following ways: (a) Determining Opportunities and Threats: The interaction between the business and its environment would identify opportunities for and threats to the business. . ______________________________________________________________ ______________________________________________________________ Business Studies 55 . (b) Giving Direction for Growth: The interaction with the environment leads to opening up new frontiers of growth for the business firms.1. proper understanding of the social. This interaction helps in strengthening the business firm and using its resources more effectively. complex.
legal. markets for goods and services. (a) The business environment is static in nature. The main factors that affect the economic environment are: (a) Economic Conditions: The economic conditions of a nation refer to a set of economic factors that have great influence on business organisations and their operations. Non-economic environment comprises social. Some of the important economic policies are: (i) Industrial policy (ii) Fiscal policy (iii) Monetary policy (iv) Foreign investment policy (v) Export –Import policy (Exim policy) 56 Senior Secondary . foreign exchange reserve. (b) Economic Policies: All business activities and operations are directly influenced by the economic policies framed by the government from time to time. These include gross domestic product. per capita income. growth of foreign trade. 3.2 TYPES OF BUSINESS ENVIRONMENT Confining business environment to uncontrollable external factors. it may be classified as (a) Economic environment. Rectify the following sentences if found incorrect.MODULE -3 Business Around Us 2.1 ECONOMIC ENVIRONMENT The survival and success of each and every business enterprise depend fully on its economic environment.2. Let us have a brief idea about each of these areas of business environment. Notes ___________________________________________________________ (b) Business environment includes factors external as well as internal to business firm. ___________________________________________________________ (d) Business environment helps the firm to identify the opportunities for the business. economic policies and economic system of the country. ___________________________________________________________ (c) The changes in business environment are quite predictable. and (b) Non-economic environment. political. demographic and natural environment. The economic environment includes economic conditions. technological. strength of capital market etc. ___________________________________________________________ 3. All these have a bearing on the strategies adopted by the firms and any change in these areas is likely to have a far-reaching impact on their operations. All these help in improving the pace of economic growth. availability of capital.
. and (iii) Mixed economy. (ii) Socialist economy. Due to increase in literacy rate the consumers are becoming more conscious of the quality of the products. values. (v) Export–Import policy (Exim policy): It aims at increasing exports and bridge the gap between expert and import. (iii) Monetary policy: It includes all those activities and interventions that aim at smooth supply of credit to the business and a boost to trade and industry. For example. The social structure and the values that a society cherishes have a considerable influence on the functioning of business firms. during festive seasons there is an increase in the demand for new clothes. which direct and control the industrial enterprises of the country and shape the pattern of industrial development. India has adopted the mixed economy system which implies co-existence of public sector and private sector. etc.MODULE -3 Business Around Us The government keeps on changing these policies from time to time in view of the developments taking place in the economic scenario. rules. Every business firm has to function strictly within the policy framework and respond to the changes therein. viz. regulations and procedures. poverty. beliefs. • Socialist Economy: Resources are owned and managed by the state. (iv) Foreign investment policy: This policy aims at regulating the inflow of foreign investment in various sectors for speeding up industrial development and take advantage of the modern technology. the government announces various duties/levies. (ii) Fiscal policy: It includes government policy in respect of public expenditure. Due to change in family composition. life expectancy rate etc. Notes 3. flower. 57 . The focus now-a-days lies on removing barriers and controls and lowering the custom duties. literacy. It may be noted that the consumption patterns. • Mixed Economy: Co-existence of public and private sectors. (c) Economic System: The world economy is primarily governed by three types of economic systems. Important Economic Policies (i) Industrial policy: The Industrial policy of the government covers all those principles. fruits. taxation and public debt. Business Studies • Capitalist Economy: Emphasis on private ownership. political expediency and the changing requirement. the dressing and living styles of people belonging to different social structures and culture vary significantly.2 NON-ECONOMIC ENVIRONMENT The various elements of non-economic environment are as follow: (a) Social Environment The social environment of business includes social factors like customs. policies. (i) Capitalist economy. more nuclear families with single child concepts have come up. Through this policy.2. traditions. sweets. This increases the demand for the different types of household goods.
1969 Trade Marks Act. a cold drink widely used even now. (c) Legal Environment This refers to set of laws. trade unions are now showing great maturity and started contributing positively to the success of the business organisation and its operations through workers participation in management. 1954 (viii) Essential Commodities Act. 2002 Besides. Most of the labour unions in India are affiliated to various political parties. 2002 (ix) (x) (xi) The Standards of Weights and Measures Act. confidence to various interest groups and investors. also adversely affect the business operations. 1972 Payment of Gratuity Act. 1999 The Factories Act. which influence the business organisations and their operations. Strikes. the government policies and attitude towards the business community and the unionism. Further. Every business organisation has to obey. with the competitive business environment. regulations. 1956 Monopolies and Restrictive Trade Practices Act. The important legislations that concern the business enterprises include: (i) (ii) (iii) (iv) (v) (vi) Companies Act. 58 Senior Secondary . the above legislations. 1999 (xii) Bureau of Indian Standards Act. However. 1986 (xiv) Environment Protection Act (xv) Competition Act. The stability of the government also influences business and related activities to a great extent.MODULE -3 Business Around Us (b) Political Environment This includes the political system. 1951 Notes (vii) Prevention of Food Adulteration Act. All these aspects have a bearing on the strategies adopted by the business firms. and work within the framework of the law. 1986 (xiii) Consumer Protection Act. the following are also form part of the legal environment of business. 1972 Industries (Development and Regulation) Act. lockouts and labour disputes etc. 1948 Industrial Disputes Act. Again the trade union activities also influence the operation of business enterprises. had to wind up operations in India in late seventies. ideology of the political party also influences the business organisation and its operations. It sends a signal of strength. You may be aware that Coca-Cola. 1956 Foreign Exchange Management Act.
Hence. conservation of natural resources etc. These encourage the business enterprises to use labour intensive techniques of production. location aspect. Germany. For example a country where population rate is high and children constitute a large section of population. legislative powers of the central and state government also influence the operation of business enterprises.MODULE -3 Business Around Us (i) Provisions of the Constitution: The provisions of the Articles of the Indian Constitution. Australia. then there is more demand for baby products. (ii) Judicial Decisions: The judiciary has to ensure that the legislature and the government function in the interest of the public and act within the boundaries of the constitution. a business has to adopt the technological changes from time to time. Moreover. But when these are made for India. The various judgments given by the court in different matters relating to trade and industry also influence the business activities. government’s policies to maintain ecological balance. a firm that keeps a watch on the changes on the demographic front and reads them accurately will find opportunities knocking at its doorsteps. put additional responsibility on the business sector. For example. (d) Technological Environment Technological environment include the methods. are coming to India due to easy availability of skilled manpower. etc. the business units from America. For example. Business Studies Notes 59 . (e) Demographic Environment This refers to the size. weather and climatic condition. availability of skill labour in certain areas motivates the firms to set up their units in such area. rights and duties of citizens. (f) Natural Environment The natural environment includes geographical and ecological factors that influence the business operations. The high rise of population indicates the easy availability of labour. in order to survive and grow in the market. Similarly the demand of the people of cities and towns are different than the people of rural areas. the pace of technological changes is very fast. It is always considered better to establish manufacturing unit near the sources of input. All these factors have a direct bearing on the demand for various goods and services. The varying technological environments of different countries affect the designing of products. sugar factories are set up only at those places where sugarcane can be grown. Canada. UK. topographical factors. techniques and approaches adopted for production of goods and services and its distribution. distribution and growth rate of population. In the modern competitive age. Further. Now a days infact. no firm can afford to persist with the outdated technologies. particularly directive principles. they have to be of 220 volts. Thus. For example. It may be noted that scientific research for improvement and innovation in products and services is a regular activity in most of the big industrial organisations. These factors include the availability of natural resources. Business is greatly influenced by the nature of natural environment. in USA and many other countries electrical appliances are designed for 110 volts. density.
There was growth in net national product. Identify the types of non-economic environment in the following cases: (a) Demand for new clothes increases during festive session. economic planning. (c) Coca-Cola is now being freely sold in the Indian market. 3. Foreign Investment Promotion Board was set up to channelise foreign capital investment in India. the government took several steps like state ownership on certain categories of industries. and (c) Globalisation. disinvestment was carried out in many public sector industrial enterprises and opened up the economy considerably. (a) Liberalisation. per capita income and development of capital goods sector and infrastructure. 60 Senior Secondary .. At the time of independence. allowed private participation in most industries. (A) LIBERALISATION Liberalisation refers to the process of eliminating unnecessary controls and restrictions on the smooth functioning of business enterprises. (b) Privatisation. This policy abolished industrial licensing in most of the cases. As a result. The Government adopted several control measures on the functioning of private sector enterprises. To speed up the industrial growth and solve various economic problems. reduced role of private sector. Let us discuss the developments under three heads. (b) Computer has outdated typewriter. What is meant by Exim policy? Notes ______________________________________________________________ ______________________________________________________________ 2. (e) Availability of skilled labour in a particular region.3 RECENT DEVELOPMENTS IN INDIAN ECONOMY The economic environment of business in India has been changing at a fast rate mainly due to the changes in the economic policies of the government. viz. (d) Sugar factories are being set up where sugarcane is grown abundantly. It includes: (i) abolishing industrial licensing requirement in most of the industries. inflation increased and government faced a serious foreign exchange crisis during eighties. But rate of industrial growth was slow.MODULE -3 Business Around Us INTEXT QUESTIONS 3B 1. etc. the Indian economy was basically agrarian with a weak industrial base. the government of India introduced a radical change in economic policies in 1991.. (ii) freedom in deciding the scale of business activities. All these efforts resulted a mixed response.
To achieve these objectives of globalisation. Notes (B) PRIVATISATION Privatisation refers to reducing the role of public sector by involving the private sectors in most activities. You can have an idea of their expansion from the fact that the total capital employed in top 500 private sector companies rose from Rs. 751 crores in 1994-95 (an expansion of 68% in just two years).39. easy availability of goods at competitive rates. liberalisation has helped us in achieving a high growth rate. This has resulted in easy entry of foreign business organisations in India. enlargement of employment potential. low inflation rate. 2. the government has adopted various measures such as reduction in custom duties.MODULE -3 Business Around Us (iii) freedom in fixing prices of goods and services. The issues of privatisation include: (i) reduction in the number of industries reserved for the public sector from 17 to 8 (reduced further to 3 later on) and the introduction of selective competition in the reserved area. as a result of these steps. etc. strong rupee. high foreign exchange reserve. capital. the expansion of public sector has literally come to a halt and the private sector registered fast growth in the postliberalised period. Business Studies 61 . (C) GLOBALISATION Globalisation means ‘integrating’ the economy of a country with the world economy. In India. This has further resulted in stiff competition and efficiency. (iii) improvement in performance through an MOU system by which managements are to be granted greater autonomy but held accountable for specified results. and reduction of regional disparities.806 crores in 1992-93 to Rs. Ultimately. good industrial relations. removal of quantitative restrictions or quotas on exports and imports. technology and labour across national boundaries. and (vi) simplified policies to attract foreign capital and technology to India. 34. the post liberalisation phase has witnessed a massive expansion of the private sector business in India. Due to the policy reforms announced in 1991. (ii) disinvestment of shares of selected public sector industrial enterprises in order to raise resources and to encourage wider participation of general public and workers in the ownership in business. Indian Economy has opened up and started interacting with the world in a big way. 1. These measures are expected to achieve a higher rate of growth. (v) reduction in tax rates. Through this liberalisation process. facilitating foreign investment and encouragement of foreign technology. (iv) simplifying the procedure for imports and exports. a healthy and flourishing stock market. This implies free flow of goods and services.
there are a few socially undesirable aspects of business such as.1 MEANING OF SOCIAL RESPONSIBILITY Social responsibility of business refers to the obligation of business enterprises to adopt policies and plans of actions that are desirable in terms of the expectation. You know that in case of companies it takes the form 62 Senior Secondary . values and interest of the society. Hence.4.2 SOCIAL RESPONSIBILITIES TOWARDS DIFFERENT GROUPS It needs to be noted that the responsibilities of those who manage the business cannot be limited to the owners.4. 3. 3. They should be provided with a fair return on their investment. non-payment of taxes. (d) Reduction in custom duties. giving misleading advertisement and so on. (c) Reduction in sales tax rates. (a) Freedom in fixing prices of goods and services. it is observed that. polluting the environment.4 SOCIAL RESPONSIBILITY OF BUSINESS Every business enterprise is an integral part of the society. in practice. the consumers.MODULE -3 Business Around Us INTEXT QUESTIONS 3C 1. (b) Disinvestment of shares of public sector industrial enterprises. This has resulted in the development of the concept of social responsibility of business whereby the owners and managers of business are made conscious about the responsibilities of their business towards the community and its customers. ‘P’ for Privatisation and ‘G’ for Globalisation. What is meant by Globalisation? Notes ______________________________________________________________ ______________________________________________________________ 2. It ensures that the interests of different groups of the public are not adversely affected by the decisions and policies of the business. It uses the scarce resources of the society to continue and grow. They have to take into account the expectations of other stakeholders like the workers. Write ‘L’ for Liberalisation. manufacturing and selling adulterated products. it is important that no activity of business is injurious to the long run interests of the society. Let us now look at the responsibilities of the business towards all these groups. (a) Responsibility towards the shareholders or owners: The shareholders or owners are those who invest their money in the business. the government and the community and public at large. workers etc. 3. However. (e) Reduction in number of industries reserved for public sector.
medical facilities. environment and education. planning. They should also be paid reasonable amount of bonus based on the business earnings. Asian paints and ITC. Indian Oil Corporation. The working conditions must be good in respect of safety. It should conduct the business in lawful manner. misleading and dishonest advertising. sports. Tata Iron and Steel Company. and ensure proper arrangement for attending to customer complaints and grievances. there should also be a provision for their participation in management (c) Responsibility towards the Consumers: A business enterprise must supply quality goods and services to the consumers at reasonable prices. Besides dividends. So it should contribute towards the general welfare of the community. L & T believes in the merits of detailed analysis. It should contribute to the community development programmes like public health care. canteen. This is governed primarily by company’s performance.MODULE -3 Business Around Us dividends. However. safety. (L&T) L & T addresses social issues of health and environment with the same professional vigour that it adopts for business issues. leave and retirement benefits etc. housing. It should preserve and promote social and cultural values. a few large companies have been voluntarily reporting their social performances in their Annual Reports regularly. its corporate social responsibility covers health. (d) Responsibility towards the Government: A business enterprise must follow the guidelines of the government while setting up the business. pay the taxes honestly and on time. cultural programmes. Business Studies Notes 63 . The prominent among them are Cement Corporation of India. It should avoid adulteration. poor packaging. Preferably. It should not indulge in any corrupt practices or unlawful activities. Social Responsibility undertaken as reported by some companies Larsen and Toubro Ltd. generate employment opportunity and contribute towards the upliftment of weaker sections of the society. (b) Responsibility towards the Employees: A business enterprise must ensure a fair wage or salary to the workers based on the nature of work involved and the prevailing rates in the market. These reports reveal that companies are becoming eco-friendly and conscious of their role in community development. (e) Responsibility towards the Community: Every business is a part and parcel of our community. Looking at the importance of the social responsibilities of business towards various groups. Broadly. the shareholders also expect an appreciation in the value of shares. it would have been better if the companies act provided for the reporting of the social activity in the annual report of the companies. implementation and evaluation of results. It must take every step to protect the physical and ecological environment of the society. surrounding its establishments. It has to be ensured that the rate of dividend is commensurable with the risk involved and the earnings made.
compassion. district authorities. health care and entrepreneurship in the community coupled with initiatives in water management and disaster relief in the country. The word ‘Ethics’ originated from the Greek word ‘ethos’ meaning character. It highlighted the social values concerning business and forced the companies from practices against consumer interest and environment protection. Its work is based on the felt needs of the communities. conduct and activities of the people based on moral principles. infrastructure development.MODULE -3 Business Around Us Oil and Natural Gas Corporation Ltd. the world council of corporate governance conferred the Golden Peacock Award to ONGC for ‘Corporate Social Responsibility in Emerging Economies-2006’ at the 7th International Conference on Corporate Governance held in May 2006 in London. etc. During the year 2005-06 it reached out to nearly 6 lakh persons and provided services like health care. and organises medical camps and sports events. (RIL) Towards community assistance and social development. It is concerned with what is right and what is wrong in human behaviour on the basis of standard behaviour or conduct accepted by the society. It provides certain code of conduct to carry on the business in a morally justified manner. In these humanitarian endeavors.5 BUSINESS ETHICS Business Ethics originated in USA in 1970’s. Honesty. (ONGC) ONGC as a responsible corporate citizen is focused on promotion of vocational education. sympathy. which guide the behaviour of businessmen or business activities in relation to the society. RIL also helps local school children through distribution of books annually and offers financial assistance to the cultural functions of the villagers. ethics from business point of view or business ethics are the moral principles. education. child care. the company partners with the government. In recognition of these initiatives. being honest and truthful about Senior Secondary 64 . (GIL) Grasim’s social projects in India’s hinterland are carried out under the aegis of the Aditya Birla Centre for community initiatives and Rural Development. are considered ethical. mass marriage programme. Grasim Industries Ltd. Similarly. village panchayats and other like minded NGO’s. truthfulness. Notes 3. feeling of brotherhood etc. Running the business without adopting unfair practices. Its social vision is to make a qualitative difference to the lives of the weaker sections of the society in proximity to its plants and improve the human development index of the nation. RIL provides financial as well as administrative support for supplying drinking under to villages in the vicinity of its manufacturing site and also established primary health centers. Reliance Industries Ltd.
and the social. The changes in business environment are unpredictable. suppliers. paying taxes. Importance of Business Environment: The interaction between the business and its environment helps in identifying the opportunities for and threats to the business. abiding to laws. duties and fees to the government honestly are some of the ethical behaviour of business. complex. Business environment is multifaceted. It differs from place to place. INTEXT QUESTIONS 3D 1. political. legal and technological factors etc. government. region to region and country to country. (a) When the organisation pays the taxes on time. ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ 2. It helps the firms to analyse the competitors’ strategies and formulate their own strategies accordingly keeping in mind its own strength and weakness.MODULE -3 Business Around Us quality of goods. and dynamic in nature.6 WHAT YOU HAVE LEARNT • The term ‘business environment’ connotes external forces. Notes 3. it open up new frontiers of growth for the business firms. competitors. (c) When the company organises sport meet for the general public for a particular locality. charging fair prices. (d) When the company declares dividend at a higher rate. Identify the group towards which the business is responsible. (b) When the company produces good quality products and sells it at reasonable price. State the meaning of ‘business ethics’. These include customers. (e) When the organisation provides proper medical facility to the staff members. Environmental analysis makes the task of managers easier in dealing with business challenges. Types of Business Environment (a) Economic environment (i) Economic Conditions 65 • • Business Studies . factors and institutions that are beyond the control of the business and they affect the functioning of business enterprises.
• Social Responsibilities Towards Different Groups (a) Responsibility towards the shareholders or owners (b) Responsibility towards the Employees (c) Responsibility towards the Consumers (d) Responsibility towards the Government (e) Responsibility towards the Community • Business Ethics Business ethics are the moral principles. • Social Responsibility of Business Social responsibility of business refers to the obligation of business enterprises to adopt policies and plans of actions that are desirable in terms of the expectation. 66 Senior Secondary . (i) Social Environment (ii) Political Environment (iii) Legal Environment (iv) Technological Environment (v) Demographic Environment (vi) Natural Environment • Recent Developments in Indian Economy (a) Liberalisation: Liberalisation refers to the process of eliminating unnecessary controls and restrictions on the smooth functioning of business enterprises. capital. This implies free flow of goods and services. which guide the behaviour of businessmen or business activities in relation to the society. (b) Privatisation: Privatisation refers to reducing the role of public sector by involving the private sectors in most activities. values and interest of the society. It provides certain code of conduct to carry on the business in a morally justified manner. (c) Globalisation: Globalisation means ‘integrating’ the economy of a country with the world economy. technology and labour across national boundaries.MODULE -3 Business Around Us (ii) Economic Policies (iii) Economic System Notes (b) Non-economic environment. It ensures that the interests of different groups of the public are not adversely affected by the decisions and policies of the business.
Explain the social responsibility of business towards different groups. 5. 4. Explain the effect of political environment in the normal functioning of business enterprises. State any two features of business environment. How does demographic environment of business influence the business activities. Explain any two non-economic environment of business.7 KEY TERMS Business Ethics Demographic Environment Economic Environment Economic Policy Globalisation. 15. 8. 3. 12. Legal Environment Liberalisation Natural Environment Political Environment Privatisation Social Environment Social Responsibility of Business Technological Environment Notes 3.MODULE -3 Business Around Us 3. List the various elements of non-economic environment of business. 13. What is meant by the term ‘ethics’? Short Answer Type Questions 6. Describe in brief the economic environment of business.8 TERMINAL QUESTIONS Very Short Answer Type Questions 1. What is meant by social responsibility of business? State the responsibilities of business towards the community. What are the steps Government of India has taken as a part of its liberalisation process. Why should a business enterprise be socially responsible? 10. What are the effects of Globalisation of Indian economy? Long Answer Type Questions 11. 9. State any two effects of liberalisation of Indian economy. 2. Describe the importance of business environment for the business firm. Mention the different types of business environment. 14. 7. Business Studies 67 .
(a) Responsibility towards Government (b) Responsibility towards Consumer (c) Responsibility towards Community 68 Senior Secondary . (a) Social environment (b) Technological environment (c) Political environment (d) Natural environment (e) Demographic environment 3C 1. Business ethics means the relationship between the society on one hand and business activities on the other. 2. (a) L (b) P (c) L (d) G (e) P 4D 1. practices. (b) Business environment includes factors external to business firm. The objectives. techniques and behaviour of business must be in conformity to the standards set by the society. technology and labour across the national boundaries. 3B 1. 2. (a) The business environment is dynamic in nature.9 ANSWERS TO INTEXT QUESTIONS 3A Notes 2. Exim policy regulates the import and export of our country. Globalisation means integrating the economy of a country with world economy. (d) Correct statement. (c) The changes in business environment are quite unpredictable.MODULE -3 Business Around Us 3. It implies free flow of goods and services. capital. 2. Through this policy Government decides the duties or taxes on import of goods and services.
banks and other places of your locality and make note of the changes that have taken place due the change in Information Technology. Mohan : Well.MODULE -3 Business Around Us (d) Responsibility towards Owners/shareholders (e) Responsibility towards Employees DO AND LEARN 1. Inside the park he read a small board . maintains the park and so also the charitable hospital in my village. Find out the raw materials being available in abundance in your area. post offices. you are required to continue the conversation by assuming a role for yourself and one for your friend Business Studies 69 . One day he met his friend’s father. Mohan : You are right. How many industries or business units are set up based on it? Prepare a report. if I remember rightly you are in a company called KCS Ltd. 2. Mohan : Great! What brings you here son? Satish : Uncle. Satish : Good Morning Uncle. He saw there a very big and well maintained park. Mr.Mohan explained to Satish about the concept of social responsibility of business. Visit the market place. I observed that the company KCS Ltd. why should a company divert its attention from its regular activities and indulge in an activity which only increases its expense? K. Once he had gone to the nearest town. right? K. Mohan : Good Morning Satish? How are you? Satish : Very fine! How about you? K. K. all these are taken up by the company as a part of it responsibility towards the community. K. He tried to recall where did he read this name before? He remembered that the charitable hospital of his village was also run by KCS Ltd.‘This Park is maintained by KCS Ltd’. But why? Satish : Uncle! Today when I went to the park.) Now. Well. Notes ROLE PLAY Satish belongs to a rural area. Mohan. Satish : Social Responsibility? What is that? (Mr. K. He decided to find out more about all this. He was filled with curiosity. I am working as General Manager (Administration). and it is called Social Responsibility of a company.
2 Types of Business Environment 3.2 Social Responsibilities Towards Different Groups 3.2 Non-economic Environment 3.1.1 Economic Environment 3.4.5 Business Ethics 70 Senior Secondary .1.4.1 Meaning of Social Responsibility 3.4 Social Responsibility of Business 3.2 Importance of Business Environment 3.3 Recent Developments in Indian Economy 3.1 Meaning of Business Environment 3.2.1 Features of Business Environment 3.MODULE -3 Business Around Us Chapter at a Glance Notes 3.2.